From Texas, I mostly cover the energy industry and the tycoons who control it. I joined Forbes in 1999 and moved from New York to Houston in 2004. The subjects of my Forbes cover stories have included T. Boone Pickens, Harold Hamm, Aubrey McClendon, Michael Dell, Ross Perot, Exxon, Chevron, Saudi Aramco and more. Follow me on twitter @chrishelman.

Why It's The End Of The Line For Wind Power

It’s the end of the world as we know it. That’s what the U.S. wind power industry is saying to itself these days. And they aren’t talking about some Mayan doomsday nonsense.

On Jan. 1 the federal production tax credit on wind investments expires. For the past 20 years the credit has offset about 30% of the cost of building wind turbines. Add to that the “renewable portfolio standards” for green energy mandated by 29 states, and as a result we’ve seen wind farms spring up across the country. Since 2007 nearly 40% of all the new electricity capacity built in this country has been wind. Wind now generates roughly 3.5% of U.S. electricity.

Don’t expect wind’s share to climb beyond that level any time soon. The end of the tax credit could very well mean the end of the wind industry.

According to the federal Energy Information Administration, the “levelized cost” of new wind power (including capital and operating costs) is 8.2 cents per kWh. Advanced clean-coal plants cost about 11 cents per kWh, the same as nuclear. But advanced natural gas-burning plants come in at just 6.3 cents per kWh.

But it could be getting a lot worse for wind. A fascinating new report by George Taylor and Tom Tanton at the American Tradition Institute called “The Hidden Costs of Wind Electricity” asserts that the cost of wind power is significantly understated by the EIA’s numbers. In fact, says Taylor, generating electricity from wind costs triple what it does from natural gas.

That’s because the numbers from the EIA and wind boosters fail to take into account a host of infrastructure and transmission costs.

First off — the windiest places are more often far away from where electricity is needed most, so the costs of building transmission lines is high. So far many wind projects have been able to patch into existing grid interconnections. But, says Taylor, those opportunities are shrinking, and material expansion of wind would require big power line investments.

Second, the wind doesn’t blow all the time, so power utilities have found that in order to balance out the variable load from wind they have to invest in keeping fossil-fuel-burning plants on standby. When those plants are not running at full capacity they are not as efficient. Most calculations of the cost of wind power do not take into account the costs per kWh of keeping fossil plants on standby or running at reduced loads. But they should, because it is a real cost of adding clean, green, wind power to the grid.

Taylor has crunched the numbers and determined that these elements mean the true cost of wind power is more like double the advertised numbers.

He explains that he started with 8.2 cents per kWh, reflecting total installation costs of $2,000 per kw of capacity. Then backed out an assumed 30-year lifespan for the turbines (optimistic), which increases the cost to 9.3 cents per kwh. Then after backing out the effect of subsidies allowing accelerted depreciation for wind investments you get 10.1 cents. Next, add the costs of keeping gas-fired plants available, but running at reduced capacity, to balance the variable performance of wind — 1.7 cents. Extra fuel for those plants adds another 0.6 cents. Finally, tack on 2.7 cents for new transmission line investments needed to get new wind power to market. The whole shebang adds up to 15 cents per kwh.

Ouch.

As Taylor figures it, natural gas would need to cost upwards of $20 per mmBTU before gas-fired power would cost as much as wind.

Granted, the American Tradition Institute is a right-wing nonprofit that in the past has railed against climate scientists and sought to discredit Global Warming fear mongering. That doesn’t mean Taylor’s calculations are wrong, just that everyone on the pro-wind side ought to read the report and chime in with their critiques.

The American Wind Energy Association says that the wind sector employs 37,000 and boasts 500 factories building components. Even with new anti-dumping tariffs on Chinese makers of wind turbines, the AWEA says that if Congress fails to extend the production tax credit for wind, many of those jobs could be eliminated and factories closed in early 2013. That’s how important these tax credits are to wind’s viability.

Taylor and Tanton figure that at the current price of natural gas, and before counting any subsidies or transmission costs, ratepayers are paying about $8.5 billion more this year for electricity from wind than they would have paid if it were gas-fired power. That amount doesn’t even include the cost of the direct federal subsidies.

What’s more, ratepayers will have to shoulder that cost for as long as the turbines are in operation. That’s $8.5 billion a year that ratepayers are forking over to subsidize a less efficient, more expensive technology; $8.5 billion that could otherwise be invested in natural gas electricity, or better yet, nuclear.

Just think, in South Carolina, power company Scana and its partners are investing about $11 billion to construct two 1,100 mw nuclear reactors on roughly 1,000 acres. To get the same amount of electricity out of wind (remember that turbines operate at an average of less than 50% capacity because of wind’s intermittancy) and you’d need more than 1,700 turbines stretched across 200,000 acres, for an upfront investment of $8.8 billion. The nukes might cost more upfront, but they last longer, they provide reliable base load power and they emit zero carbon.

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Regarding your land use figures for wind versus nuclear, wind’s actual land use is a few percent of the figure you cite because the space between wind turbines can continue being used for farming, ranching, or whatever its prior use was. You also ignore the massive amount of land that must be despoiled in mining or drilling for any fossil or nuclear fuel. http://www.nrel.gov/docs/fy09osti/45834.pdf

Finally, you ignore the massive government subsidies that have gone and continue to flow to the fossil and nuclear industries. If you don’t believe me, you can use the nuclear industry’s own tally: http://www.nei.org/resourcesandstats/documentlibrary/newplants/whitepaper/federal_expenditures_for_energy_development

“…you ignore the massive government subsidies that have gone and continue to flow to the fossil and nuclear industries…”

Mr. Goggin makes an apples and oranges comparison. It’s like saying that California eats more food than Vermont. Unlike fossil fuels, wind power is for electricity only. Try painting a drastically different picture by pursuing that metric using a common denominator, like:

Take a look at AWEA’s board: chock full of fossil fuel wind-profiteers.

http://www.awea.org/learnabout/aboutawea/bod.cfm

He may just as easily have said “I, Michael Groggin, am heavily subsidized by the fossil fuel industry, so disregard everything that follows”.

Michael’s distortion of the land use impacts of wind energy is typical of the deception so common among wind-o-philes. “Just keep talking about the 2-3 acres per turbine taken out of ag production or hacked out of mountain ridge tops and maybe no one will notice they are 50 stories tall, decimate endangered species, have maybe a 12 year lifespan and are ineffectual in protecting the environment.”

Groggin also routinely speaks as if his turbines are interchangeable with baseload fossil plants. If so, he needs to have a talk with another AWEA board member, Germany’s E ON (Yes, Germany):

“Wind energy is only able to replace traditional power stations to a limited extent. Their dependence on the prevailing wind conditions means that wind power has a limited load factor even when technically available…. Consequently, traditional power stations with capacities equal to 90% of the installed wind power capacity must be permanently online [and burning fuel] in order to guarantee power supply at all times”

900MW fossil online to make 1000MW wind feasible.

(This also means wind’s land use impacts must be added on top of the existing fossil and nuclear fuel land use impacts. Or E ON is lying.)

So now, who do we believe? Fossil fuel generator and AWEA board member E ON? Or fossil fuel subsidized Michael Groggin?

And it is striking that Groggin references the nuclear industry.

Exelon, the US’ largest nuclear operator and also a wind developer, formerly enjoyed a prominent seat on AWEA’s board. But when Exelon objected to extending wind subsidies further, using arguments not dissimilar to the Tanton/Taylor study, AWEA unceremoniously tossed Exelon overboard in a closed door meeting; a meeting Exelon was not permitted to attend.

Surprisingly, Groggin didn’t trot out the green jobs argument in this post. Perhaps he lost his script? It is the same script uses by fellow AWEA-bots David Ward and Kevin O-Rourke.

You see, they all have a vested interest in extending tax credits for renewable energy in the name of job creation. Why? It will protect the green jobs they value most: their own.

And no industry has a greater stake in preserving wind tax credits than the fossil fuel industry. They, from BP to Duke to FPL to E ON, are among it’s largest beneficiaries.

It is time to give Mr. Groggin a well earned retirement by ending the multi-billion dollar/year Federal Production Tax Credit for wind energy once and for all.

Land area per turbine is .25 acres per turbine. For this the farmer gets paid which helps him or her to sustain their farm.

http://www.nrel.gov/analysis/power_databook/calc_wind.php

The “footprint,” which is typically around 0.25 acres per turbine, does not include the 5-10 turbine diameters of spacing required between wind turbines. Because of this spacing, the area included within the perimeter of the wind farm will be larger. However, it is important to note that the land between the turbines – minus the “footprint” area – is still usable for its original purpose. For a more detailed analysis of land use by wind farms, please see Land-Use Requirements of Modern Wind Power Plants in the United States.

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Wind energy is only able to replace traditional power stations to a limited extent. Their dependence on the prevailing wind conditions means that wind power has a limited load factor even when technically available…. Consequently, traditional power stations with capacities equal to 90% of the installed wind power capacity must be permanently online [and burning fuel] in order to guarantee power supply at all times”

900MW fossil online to make 1000MW wind feasible

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Here is a study for North Carolina. Computer simulations show only 6% backup is needed. THis can be done with fast acting natural gas turbines that can come online in less than 15 minutes.

http://www.ieer.org/reports/NC-Wind-Solar.pdf

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It is time to give Mr. Groggin a well earned retirement by ending the multi-billion dollar/year Federal Production Tax Credit for wind energy once and for all.

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A very cost effective solution to AGW (anthropogenic global warming) is wind and solar. The future costs of AGW are staggering if not capped in our emissions. The best bargain there is, is renewable energy implemented in a very rapid fashion. With assistance for a few more years wind energy does not need support and can be implemented rapidly on its own. Time is of the essence due to the warming effects of co2 on our climate.

This is for the base only. Exelon Wind’s lease language permits 2-3 acres per turbine to come out of production. This includes access roads, etc. Add in lay down pads and substation footprints, often 20 acres or more, and the turbine project proposed for my area would have taken more ag land out of production than any other industrial project except one: our ethanol plant. And the 45 turbines once proposed for our area could have been replaced by a single semi-trailer mounted gas turbine that could fit easily inside your average dairy barn. On a MWh per acre basis, wind is a profound loser.

“Here is a study for North Carolina. Computer simulations show only 6% backup is needed. This can be done with fast acting natural gas turbines that can come online in less than 15 minutes.”

I am glad you concede the requisite fossil/wind combination. Do you also concede that the cost of that natural gas firming plant should be added to the LCOE of wind?

And your model is interesting. But I quoted E On Netz. They do not need models. They operate German utility grids AND wind projects. I see your study and raise it with real world empirical data. :)

“A very cost effective solution to AGW (anthropogenic global warming) is wind and solar. The future costs of AGW are staggering if not capped in our emissions. The best bargain there is, is renewable energy implemented in a very rapid fashion”

This is an assertion, not evidence. And it is not highly regarded by James Hansen, the father of AGW hysteria:

“Suggesting that renewables will let us phase rapidly off fossil fuels in the United States, China, India, or the world as a whole is almost the equivalent of believing in the Easter Bunny and Tooth Fairy.”

Whatever one believes about AGW, wind and solar have no chance of making any meaningful dent in the CO2 emissions that are alleged to be the culprit. I say alleged because the IPCC is slowly adding more credence to solar forcing playing a larger role in global warming than once believed.

When you think subsidies the correct measure is $ per mWh delivered. On that basis wind is getting very high subsidies. Why does the rest of the electrical industry get so much? They produce a lot more mWhs.

There is widespread belief that nuclear energy is low-cost and low-priced which is only because it is heavily subsidized and tax-exempted. Once these exemptions and subsidies are removed, which sure will be as happened with the other energy forms, its price will sky rocket. The largest nuclear energy producers amassed huge profits from their long-functioning plants but electricity prices did not come down. The energy is there and the profit, but the profit goes to a few hands; the burden of keeping waste becomes that of future generations. Statistics show that the more nuclear energy is produced, the more highly priced it becomes. But, when the more wind energy is produced, the lesser has its price become. It is because nuclear monopolies controls governments unlike renewable energy producers and have a free hand in deciding at what price their product is to be sold even while enjoying subsidies, and at what rate their price is to be raised each year which is about 10 percent now. The question is, without state subsidies, exemptions and concessions, how are nuclear plants viable? In many countries, local communities and local administrations run economically and environmentally viable small renewable energy plants without setting up elaborate grids. They do not dictate their laws or command governments what policies are to be adopted in the energy sector. But that is not the case with nuclear energy sector. Because their plants need huge amounts for construction and they possibly own their distribution grids, they consider governments their slaves, which they actually are, and dictate terms, rules, laws, even while enjoying state concessions. Why should this go on for more years and in more countries? Because there are already established other energy production forms which do not enforce political and economic slavery, why rely on and retain a rich slave master who is unsuitable to the modern-day world? It is irrational and illogical that energy makers function as policy makers also. Power makers delegate their representatives to the policy making body; top government officials in the policy making body joins the energy makers when they retire, which causes these heavy state subsidies, exemptions and concessions to nuclear energy makers. First they work in the government, lobbying for the company; then they work in the company, again lobbying government for the company. Perched in their positions which we mistake for governmental, for the past decades, they have been crying out loud that unless nuclear energy is there, the world will fall into darkness. 15 percent of energy produced in Germany in 2009 came from renewable energy sources. This could be made to 50 percent in the world in 2020 and to 100 percent by 2040. They also have been demanding extension of the life period of their reactors, for they would bring steady profits without further investment, and for, they would be there to defeat move to turn to safe renewable energy sources.

Link does not work. The only “subidies for oil” I could find is for small stipper wells and not avaiable to large companies. Now you can make a claim about nuclear but this article is talking about gas generation.

The environmental “footprint” for wind projects is thousands of miles because the industry’s turbines slaughter migratory birds. The same winds that spin the turbine blades are used by birds. They have to use the same ridge lines and wind currents when they migrate. The industry knows all about this problem but they completely avoid studies that will expose these type of impacts.

Perhaps you should live next to a few of these wind turbines as we do. It will not be so appealing. Try sunrise and sunset or listening to them…

We are sick of paying for these as a ratepayer in the fuel clause adjustment 2.5 to 4.5 cents/kwh and as a taxpayer 2.2 cents/kwh in addition to the 1603 incentives. Why are we funding some of these foreign entities (ie. Iberdrola) with money borrowed from China in our children’s names.

Our people need to understand the true cost of this over time..not the politically correct version you are telling.